That's why prudential supervision of investment institutions and not just of traditional banks is so important and why the credit crunch has ballooned out so immensely for the most part over a fairly insignificant but irresponsibly, immensely highly leveraged sub-prime mortgages. As for the reserve bank printing money, I would still argue that above all that keeping them separate from the treasury and the political authority is paramount. History has shown that particularly if political pressure is placed on monetary policy it creates runaway inflation. As far as monetising debts, of course large scale monetisation will bring hyper-inflation, but equally a country highly in budget deficit may plausibly be forced to depreciate it's currency to finance an otherwise insurmountable burden. As for low steady levels of inflation, they are almost impossible to eliminate and in some ways are necessary to maintain an efficient economy.